…And Now a Word from Your Hedge Fund

This post was written by Frederick Lah.

This past Wednesday (July 10), the SEC voted 4-1 to approve amendments to Rule 506, lifting the 80-year ban on advertising for hedge funds and certain other investments (See, SEC Votes to Ease 80-Year-Old Ban on Private-Investment Ads.) Rimon previously reported these amendments when they were initially proposed in August 2012, and you can read our earlier analysis, SEC Regs Amended To Allow Hedge Funds To Advertise: Potential Data Privacy Implications.

Under the revised Rule 506, hedge funds and other issuers seeking to conduct private offers may now use general solicitation and advertising to offer their securities, provided that: (1) the issuer takes reasonable steps to verify that the purchasers are accredited investors; and (2) all purchases of the securities fall within one of the categories of persons who are accredited investors, or the issuer must reasonably believe that the investors fall within one of the categories at the time of the sale.

To be an accredited investor, the individual’s net worth must exceed $1 million, excluding the value of a primary residence, or the individual’s annual income must exceed $200,000. According to the SEC, the determination of the reasonableness of the steps taken to verify that the investors are accredited is an “objective assessment” by an issuer. An issuer is required to consider the facts and circumstances of each investor and the transaction. The final rule provides a non-exhaustive list of methods that an issuer may employ for verification.

As noted in our previous analysis, it is unlikely we’ll see hedge funds competing with large consumer brands for prime advertising space. Instead, given the target audience, we’ll likely see more tailored efforts, such as email marketing campaigns, direct phone marketing, and targeted online advertising. We are also likely to see new strategies from issuers such as speaking about funds in public and posting details on websites (which may represent quite a change considering many issuers don’t even have websites). As issuers enter into the world of marketing, they will also have to deal with the reality that the SEC is not the only regulatory agency on their radar; these issuers will need to make sure that they’re not engaging in unfair or deceptive marketing practices and drawing the ire (and an investigation or enforcement action) of the FTC.

The amendments become effective 60 days after publication in the Federal Register. For more information on this issue, please contact Frederick H. Lah, the author, or Joseph I. Rosenbaum, editor and publisher of Legal Bytes.

What You Don’t Know Can Hurt You

Multiple Choice Question: What do the following have in common:

“Privacy & Data Protection: Distinctions Between Surveillance and Secrecy”

“Ethics, Process, Privilege, Discovery and Work Product in the Digital Age”

“When Worlds Collide: Old Ethics and New Media”

“Outsourcing: The Law & Technology”

“The Changing Legal Landscape: Evolution or Revolution”

“Growing Your Business Internationally – What to Know Before You Go”

“Social Media, Mobile Marketing, Clouds and Crowds: (modules)

  • Advertising & Marketing in a Digital World
  • Media & Entertainment: Digital Rights and Wrongs
  • Financial Services, Payments & E-Commerce
  • Online Gaming, Gambling & Virtual Worlds
  • Apps & M-Commerce
  • Context & Geo-Marketing: Wi-Fi, Bluetooth, SMS, RFID, QR Codes & Augmented Reality
  • Operations & Performance, Security, Compliance and Interoperability
  • Wired & Wireless: Sweepstakes, Contests, Product Placement & Branded Entertainment
  • Anti-Social? Communication & Public Relations for Companies, Employees & Investors
  • Behavioral Advertising, Endorsements, Blogs, Buzz, Viral, Street Teams & Word of Mouth
  • Labor & Employment Policies in a Networked Age: The Good, The Bad & The Ugly
  • Crowd Sourcing, Crowd Funding, Crowd Investing: Today & Tomorrow

“Privacy, Data Protection & Globalizing Technology: Digital Commerce Brings Legal Challenges”

“Comparative Advertising Issues: Multinational Brands; Global Challenges”

“Direct to Consumer: Legal Challenges in the Digital Marketplace”

“Out of Control? Challenges to Privacy & Security in a Big Data World.”

 

Answers: (a) Seminars & Presentations Given; (b) Seminars & Presentations Available; (c) Targeted at Lawyers; (d) Targeted at Commercial and Business Management; (e) Relevant to Small-to-Medium Size Business; (f) Relevant to Multinational, International & Global Companies; (g) None of the Above; or (Y) All of the Above.

If you guessed (Y), you are correct. Let us know if any of these, a combination of these or a customized version of these or any other presentations might be right for you. Hey, you never know, but what you don’t know, can hurt you. For more information, contact me, Joe Rosenbaum, or the Rimon attorney with whom you regularly work.

2012 Thank You 2013

This is the time of year when many of you are celebrating holidays, spending time with family, friends and loved ones, bidding farewell to the end of 2012, and celebrating the coming of a New Year – 2013. A time when many of us take a moment to reflect on the year gone by and perhaps wonder what the New Year will bring. There are people who have touched us and with whom we’ve gotten closer; those who we have missed and resolve to try to be better than we were this past year; and perhaps a few we might like to forget. We also pause to remember some who are no longer with us and take comfort in knowing that by remembering them, we keep their spirit – all we have learned from them and all they have meant to us – alive. As 2012 comes to an end, we all should reflect on the friendships and experiences that helped us grow, and take a moment to thank those who have helped us get through tough times, and those who have shared the joys of good ones.

For me it’s a time to resolve to keep doing some of the good things I’ve done this past year, and to try to do some things better next year. As the year draws to a close, it also gives me an excuse to say thank you and express appreciation to all those who have enriched my life. If you are reading this, you are part of my audience, part of the fabric of my professional life; and like the threads of that fabric, you have helped me weave the patterns and textures you read in these digital pages. I am grateful for your readership and in some cases, your friendship. I am always appreciative when you take a moment to read and maybe gain some insight, while being a little entertained. Thank you.

I especially want to thank a few people at Rimon like Erin Bailey and Lois Thomson and Rebecca Blaw who make this blog happen. These are the people you don’t see, but I do – they help make Legal Bytes come alive. They are awesome and amazing, and there aren’t sufficient words to express how grateful I am – especially when they get my email that says "please can we get this posted ASAP." Thank you so much. You make it look easy and I could not do this without you!

I would also like to thank Carolyn Boyle at the International Law Office (ILO) – the force behind motivating me to push content into the U.S. Media and Entertainment Newsletter; and while I can take credit for the substance and nagging my colleagues to contribute, without her, the thousands of readers who enjoy the links and insights would be waiting far too long. Thank you.

So as the year comes to a close and we look forward to the next, let me express my appreciation and gratitude to each of you. You motivate me to keep this interesting and exciting – even when I get lazy about posting. My best wishes to each of you, your families, friends and loved ones, for a wonderful holiday season and a terrific new year, filled with health, happiness and success.

2012 Season’s Greetings & Happy New Year 2013

This is the time of year when season’s greetings, holiday and new year’s wishes, regardless of religion, culture, ethnic background or heritage, fill the air. A period when we spend lots of time and attention on cards, gifts, attending or hosting parties, dinners and otherwise gaining the 10 pounds we resolve to lose in the new year. I don’t want to ruin those traditions, so among the flurry of well-wishers, holiday revelers, frosty noses and smiling faces, let me join with others and wish you an enchanting and joyous holiday season, and a healthy, happy new year filled with wonder, challenge and excitement.

As many of you know, in years past I use to agonize over gifts to clients, colleagues, family and friends. A number of years ago, rather than sending people trinkets they never want or need; rather than feeling guilty I’ve forgotten someone or perhaps given the same thing I gave last year or, worse – gave you the gift you gave me!!! – I started my own tradition of sending a personalized note and making a contribution to a charitable organization of my choice in honor of family, friends, colleagues and acquaintances, and in memory of those we have lost. In that spirit, as I have done for some, I have made a donation to the St. Jude Children’s Research Hospital, and this year it seems somehow to be even more meaningful. Perhaps it is my way – my attempt – to find ways to let our children know there is more good than evil in the world. That good people don’t give up; won’t give up. That the battle may never end, but we will never resign ourselves to the way it is; never stop believing it can and will be better. At a time when so many of us might feel helpless to comfort each other.

To help, we need to find ways to make a difference – one step at a time. I know we can’t all change the world. But we might just be able to change a life or two or three. Yes, it’s corny. So what? We are already cool and so hip. We speak to each other in "tweets" and text messages, in language that accommodates the limitations of the technology – OMG that is sew kewl! So for the record, I’m OK with being traditional. Perhaps a little old-fashioned. We talk about random acts of kindness as if it were only a bumper sticker. Why be kind? Why help others? Why give? Not just this time of year, but as a part of who we are. Part of who we should be. Part of who we need to be to change the world.

Sure, maybe the homeless man will spend it on a beer – but maybe not. Yes, it’s true that someone may be embezzling money from the battered women’s shelter – but maybe they are not. What if – yes what if, each of us shows a little faith and kindness to others less fortunate – those who have so little. What if taking a moment to care pays more dividends than we care to believe; more than we know. The real inconvenient truth is that we often use failure as an excuse not to give or to help others who have less. Think about every person we honor because of their selfless dedication to helping others. We admire them not because they gave; we honor them because they never gave up. They don’t seek rewards or even recognition. They keep going, even when it seems impossible to make a difference. Our heroes often have little themselves, yet they give unselfishly to others. Adversity. Challenge. Humiliation. Their belief in helping others is steadfast. Beat them down, they get up and go on.

This year, we have been confronted by unspeakable images of horror – man’s inhumanity to man. I feel helpless to comprehend the tragedy in Newtown, Connecticut. Helpless against unimaginable sorrow. But we have also seen people caring for each other. As a community. The prayer vigils and outpouring of love and support in the hearts and minds of so many across the nation and the globe continues unabated. Don’t stop. When the cameras leave and the news coverage moves on – there are people who will still need your help, your love and support. We have seen or heard about natural disasters with unparalleled fury. But we have also seen the firefighters, ambulance personnel, emergency medical services, and so many others routinely risk their lives, no matter what the conditions, to rescue and save the lives of others – far too often at the risk of their own. And then there are the small acts of kindness, caught on camera unbeknownst to the good Samaritan – the image of a New York City police officer, giving shoes to a homeless man, shoes bought with his own hard-earned money.

Each of us should make a little more of an effort to help others. To give to those who are less fortunate, the thoughtfulness and help we would hope someone might give us if we needed it. Yes, even if we are not sure they will use it wisely or turn their lives around. Yes, even if we are disappointed or skeptical. Even if we are sure they won’t appreciate it. Have a little faith – this isn’t about religion. It is about tolerance and understanding and a willingness to accept that we may not know why some people are what they are, but we can help nonetheless. I don’t pretend to be a paradigm of virtue. I have walked past my share of homeless people, huddled in corrugated cardboard boxes, pretending to look the other way – avoiding their eyes so I’m not shamed into giving them a few dollars. But as I realized last year and each year that goes by, I spend more on a newspaper subscription or Starbucks or the new smart phone, than I am willing to give someone who is hungry or cold or alone . . . . . and I feel terrible. So now I’ve started to go back to those homeless, often helpless people – maybe not often enough, but when I do I feel better. It feels right. I like that feeling. Stupid me, I still don’t do it often enough. My father did, rest his soul. I should have learned from him. Hopefully it’s not too late. So I’m starting to pay more attention to what he never said, but always did. I’ve gotten better – but only a little. In this age of digital miracles, when communicating across the globe is as simple as the push of a few buttons, let’s not forget the miracles that happen face to face, person to person. The gift of kindness and compassion; of charity and community; of helping the needy and giving hope to the hopeless. This coming year, I will try again to be better. I will keep trying. I will also try to keep in touch in a more meaningful way and take the time that you need. Time is a precious gift. Something I value when it is given to me.

I also value the diversity of wonderful people I’ve come to know and care about over the years and throughout the world – you know who you are, and if you aren’t among those I’ve met, just send a signal and say "hello" – please. There is so much I still have to learn from each of you and so much we have to share with each other. So to family and friends, colleagues and acquaintances, clients and adversaries, those who know me far too well and those who don’t have a clue how they got on this email list, let me close by wishing each of you health, peace, comfort and joy this holiday season and in the year ahead. May those who love you come closer and those who dislike you forget why. Most of all, I wish all of you the extraordinary feelings of inner warmth and goodness that come with helping another . . . maybe changing another person’s life for the better . . . a person to whom you owe nothing and who expects nothing from you. Think what the world would be like if we all did that.

Warm regards for the holidays and best wishes for the new year. Sincerely,

– Joe Rosenbaum

U.S. Court Protects Middle Earth. Hobbits, Not Inmates, Take Over Asylum.

A United States District Court for the Central District of California has granted plaintiffs Warner Bros., New Line Cinema, MGM and Saul Zaentz – the motion picture studios and producer behind the forthcoming film "The Hobbit: An Unexpected Journey" – a temporary restraining order against Global Asylum (also known as The Asylum of Burbank), blocking the release of "Age of the Hobbits." The plaintiffs previously filed suit against Global Asylum (Warner Brothers Entertainment, et al. v. The Global Asylum, Inc.; CV 12 – 9547 PSG (CWx)), seeking an injunction against infringement and damages for trademark dilution, false designation of origin, copyright infringement, false advertising, unfair competition and violations of California’s Business and Professions Code. The Peter Jackson film, a motion picture adaptation of J.R.R. Tolkien’s classic book slated to open tomorrow, December 14, continues the successful "middle earth" franchise created by the success of The Lord of the Rings film series. The motion picture epic trilogy reportedly has gleaned more than $3 billion to date.

Asylum has a history of creating relatively low-budget films with parodied titles of Hollywood blockbusters (e.g., "Snakes On A Train," "Transmorphers: Fall of Man," "American Warships"). The studios pointed out these alleged parodies are always timed to coincide with release of each major motion picture counterpart and use "confusingly similar titles."

In granting the restraining order, Judge Phillip S. Gutierrez said the plaintiffs satisfied the legal standard requiring a plaintiff to demonstrate it has a valid copyright infringement claim, that there would be imminent danger to the plaintiff if the order is not granted, that the plaintiff would suffer more and that the order would advance the public interest. The judge’s decision specifically notes that: "The evidence of the advertising and promotion for ‘Age of Hobbits,’ as well as the media coverage the film has received, provides support for Plaintiffs’ contention that Asylum intended to deceive consumers by associating its movie with Plaintiffs’ works." You can read the Order in its entirety right here, Order Granting Plaintiff’s Ex Parte Application for a Temporary Restraining Order.

As always, if you need help or more information, contact me, Joseph I. Rosenbaum (joseph.rosenbaum@rimonlaw.com), or any of the Rimon lawyers with whom you regularly work.

Gift Cards Deal With Discounts & Charity; Chart Updated

This post was written by Keri S. Bruce and Joseph I. Rosenbaum.

If you have been coming back to Legal Bytes to keep up with this and other developments in the law of Advertising Technology & Media ("ATM"), you know that we have been following the world of gift cards for many years (e.g., Gift Card Issuers Fight & Switch, Gift Cards in New Jersey: It’s Complicated!, Federal Reserve Board Has a Free Gift (Card) For You, Credit Card Act of 2009: Act I, Scene 1, Gift Cards in the Legal Limelight, Gift Cards: The Updated Chart is Still Free). If you are a regular Legal Bytes reader, you also probably know that we published and routinely update our U.S. Gift Card Statutory Chart – a reference tool you will certainly find helpful, although not a substitute for experienced legal counsel. In addition to the amendments noted below, we have updated our U.S. Gift Card Statutory Chart and you can read or download the updated chart right here (U.S. Gift Card Statutory Chart) [PDF].

You will also appreciate that we advise clients in this area all the time, assisted by an able team of financial services regulatory specialists, and so it will come as no surprise that we are telling you about some changes to the law in Vermont and Rhode Island that apply to gift cards. The term "gift certificate" is often used in the law, but separate definitions make it clear that the law applies to cards or any similar instrument, regardless of the material (e.g., paper, plastic, beads).

In addition to the Federal Credit Card Act of 2009, many states have their own regulations of gift cards and gift certificates. While many states have carve-outs in their gift certificate laws for loyalty and reward cards, Vermont has gone a step further and embraced group coupon/discount providers by separately defining these cards and providing separate disclosures to benefit consumers. In light of popular group coupon/discount providers, new marketing efforts involving gift cards and the continued prevalence of class actions, such as In re Groupon Marketing and Sales Practices Litigation, where Groupon reached a nationwide class action litigation settlement over allegations it had illegal expiration dates and other provisions on its vouchers, it is even more important to stay on top of these ever-changing laws.

Effective as of May 18, 2012, amendments to the Vermont statutes (Vt. Stat. § 2701 et seq.) seek to address issues arising from popular group coupon/discount providers. The new amendments introduce definitions for "a loyalty, award, or promotional gift certificate," "paid value" and "promotional value," extend the expiration dates for the paid value of a gift certificate, and remove the specific exemption for food product gift certificates.

Under the amended law, a "loyalty, award, or promotional gift certificate" is defined as a gift certificate issued on a prepaid basis primarily for personal, family, or household purposes to a consumer in connection with a loyalty, award or promotional program, and that is redeemable upon presentation to one or more merchants for goods or services, or is usable at automated teller machines.

These definitions are important because, if defined as loyalty, award or promotional gift certificates, they can be exempt from the statute’s requirements on expiration dates and fees and some other restrictions that would otherwise apply, provided that certain requirements are met.

To qualify, these instruments must disclose, on the front of the certificate, that the certificate is issued for loyalty, award or promotional purposes, and the date of expiration for both the paid value and promotional value (if any). (More on that distinction in a moment.) On or along with the instrument, the consumer must be informed as to the amount and conditions under which fees may be imposed, and if a fee is assessed and on the instrument, a toll-free telephone number and, if one is maintained, a website a consumer may use to obtain fee information (disclosed on the certificate).

The Vermont amendment distinguishes between "paid" and "promotional" value. Paid value is the value of any money or other consideration given in exchange for the gift certificate. Promotional value means any value shown on a gift certificate in excess of the paid value. Example, a loyalty program buys 1 billion $25 gift cards and pays $19.99 each. The $19.99 is the paid value and the $5.01 is the promotional value. The statute prohibits the paid value from expiring for five years (extended from the previous three-year requirement), while the promotional value is exempt from the restrictions on expiration dates and fees.

Meanwhile, in Rhode Island, amendments – effective as of June 19, 2012 – to gift certificate provisions of the state’s Unfair Sales Practices law (R.I. Gen. Laws § 6-13-12) allow gift cards donated for fundraising purposes to expire, but only if the card clearly states that the instrument has been donated for charity and a clearly defined expiration date of not less than one year after the issuance, is disclosed to the recipient.

If you need help from lawyers who know this area and can provide experienced, practical counsel, contact Joseph I. ("Joe") Rosenbaum or Keri Bruce or your favorite Rimon lawyer, all of whom will be happy to help.

IAPP Privacy Presentation – Is the Wizard of Oz Still Behind the Curtain?

On May 10, 2012, I had the privilege of making a presentation at the IAPP Canada Privacy Symposium 2012. The title of my presentation was "Social and Mobile and Clouds, Oh My!" and it addressed some of the emerging issues in privacy, data protection and surveillance that arise as a result of globalizing technology and the convergence of social media, mobile marketing and cloud computing.

As part of that presentation (and as I have started to do for some time now in other presentations), I raised the issue of how lawyers, the law, legislators and regulators often use words to describe activities – words rooted in tradition or precedent – that are no longer applicable to the activity in today’s world. "Privacy" is such a word, although "not applicable" perhaps is too harsh. Obviously the word has significant applicability in a wide variety of situations. But "invasion of privacy" has become a knee-jerk reaction to virtually every information-gathering activity, even information readily and publicly available and, in some cases, posted, disclosed or distributed by the very individual whose privacy is alleged to have been "invaded."

Please feel free to download a PDF of my presentation, "Social and Mobile and Clouds, Oh My!" [PDF] (Note: Embedded video file sizes are too large to include), and let’s start a conversation about how we use words and how they wind up in laws and regulations. Lawyers work with words. Use them artfully and they provide powerful structures within which society, commerce and all forms of human endeavor function. Use them improperly and they cause confusion, uncertainty, inconsistency and inherently inequitable outcomes.

Seems like I am not the only one to point this out. Take a look at the insightful comments by John Montgomery, COO of GroupM Interaction, North America, as reported in a MediaPost RAW posting on Social Media entitled: If Marketing Terms Could Kill.

Kudos John. I’m with you. Let’s get it right.

FYI, Rimon has teams of lawyers who have experience and follow developments in privacy and data protection, information security and identity theft. If you want to know more, if you need counsel or need help navigating, or if you require legal representation in this or any other area, feel free to call me, Joseph I. ("Joe") Rosenbaum, or any of the Rimon lawyers with whom you regularly work.

Gift Card Issuers Fight & Switch

Back in August 2010, Legal Bytes reported that a New Jersey law applicable to abandoned property (escheat) would effectively alter the tenor and scope of the New Jersey gift card law (see, Gift Cards in New Jersey: It’s Complicated!).

Well today, in an Associated Press article published by ABC News Internet Ventures. Yahoo! – ABC News Network, it is being reported that American Express, which was already pursuing its legal rights and remedies in a law suit filed to overturn the law, has now opted to pull gift cards from retail sale in New Jersey.

The new law would require sellers in New Jersey to capture the ZIP code of everyone who buys a gift card. Monies left on those gift cards bought in New Jersey that lie dormant and unused after two years would then ostensibly be required to escheat to the state. After the law was passed about two years ago, American Express (joining forces with the New Jersey Retail Merchants Association and others), filed suit challenging the new law. Initially, a U.S. District Court issued an injunction against implementing it, but more recently the injunction was removed – perhaps the stimulus for the reported move by American Express.

If you have been coming back to Legal Bytes to keep up with this and other developments in the law of Advertising Technology & Media (“ATM”), you know that Keri Bruce in Rimon’s ATM practice group previously posted a report entitled Gift Cards Tag Along with Credit Card Legislation, noting that federal legislative and regulatory requirements will soon apply to gift cards. You will also see links to a U.S. Gift Card Statutory Chart (Updated), which those of you who work with gift cards and similar financial payment instruments may find helpful; and you already know we follow and advise clients in this area all the time, assisted by a team of financial services regulatory specialists as well.

So if you need help from lawyers who know this area and can provide experienced, practical counsel, contact Joseph I. (“Joe”) Rosenbaum or Keri Bruce, or your favorite Rimon lawyer, all of whom will be happy to help.
 

German Court Requires Facebook to About Face

This post was written by Katharina Weimer.

A German Court thinks it may be time to de-friend Facebook. On 6 March 2012, the Regional Court in Berlin took a rare opportunity to rule on several features available on the social media platform Facebook, and not surprisingly opined that Facebook needs to provide more transparency and ask for consent when using users’ information. Worded in the form of consents, the German Court held:

  • Consent No. 1: Facebook may no longer make available one of its most used features, the “friend finder,” without proper information of the user and consent of the user’s contacts who are invited to join Facebook via email
  • Consent No. 2: The exploitation of user content that is protected by intellectual property rights requires affirmative and specific user consent. The language purporting to grant Facebook a comprehensive, worldwide, royalty-free license that is incorporated into Facebook’s existing terms of use is not sufficient.
  • Consent No. 3: Facebook needs to reword its consent regarding the use of personal data for advertising purposes

Although the judgment is technically not legally binding as yet, Facebook announced it will carefully review the consequences and consider legal remedies once the judgment is available in full length. This decision may lead the way to more transparency and user control over social media and the use of information in Germany. Having a world of information at your fingertips and incorporating user content in Web 2.0 services is a great tool for user interaction and learning more about them, but the court’s ruling suggests that Facebook not forget for whom their service was created – the users, not the advertisers. As Facebook edges closer to an IPO and looks to monetize its services and features, the German Court’s view is that Facebook needs to continue to give its users control over their content and information. Stay tuned to Legal Bytes for more details as the court proceedings continue.

Vielen dank (many thanks) to Katharina Weimer for the insights and the update. If you need legal or regulatory counsel, contact Katharina directly, or you can always contact me, Joseph I. (“Joe”) Rosenbaum, or the Rimon lawyer with whom you regularly work.

White House Releases Privacy Report and Calls For a Consumer Bill of Rights

Earlier today, Secretary of Commerce John Bryson and Federal Trade Commission Chairman John Liebowitz outlined the Obama administration’s strategy for ensuring “consumers’ trust in the technologies and companies that drive the digital economy.” On the heels of their announcement, and although it is dated January 2012, the Department of Commerce released a long-awaited report entitled “Consumer Data Privacy in a Networked World, A Framework for Protecting Privacy and Promoting Innovation in the Global Digital Economy,” the administration’s roadmap for privacy legislation and regulation in the years ahead.

The announcement and privacy blueprint envisions a comprehensive and integrated framework for data protection, rather than the current sector-patchwork-quilt approach, and is comprised of four key pillars: (1) a consumer privacy bill of rights; (2) a multi-stakeholder process and approach dealing with how such a bill of rights would apply in a business context; (3) more effective enforcement; and (4) greater commitment to harmonization and cooperation in the international community.

The Report outlines the seven principles of its proposed Consumer Privacy Bill of Rights and, although calling for legislation and regulation to codify and memorialize these rights, also sets out consumer privacy standards that companies are asked to immediately and voluntarily adopt in a cooperative public-private partnership. These seven principles are:

  1. Individual Control Through Choice
  2. Greater Transparency
  3. Respect for Context
  4. Secure Handling
  5. Access & Correction Rights
  6. Focused Collection
  7. Accountability

The Report notes that a company’s adherence to the voluntary codes will be viewed favorably by the FTC in any investigation or enforcement action for unfair and deceptive trade practices. By implication, a company that does not adopt and follow these principles might be used as evidence of a violation of Section 5 of the FTC Act, even if federal legislation is not passed on the subject. The FTC is expected to soon release its Final Staff Report on Consumer Privacy that will be consistent with the Obama administration’s proposed Framework Report. The report reinforces the administration’s commitment to international harmonization, and also touches upon the role state attorneys general in the United States can play. While we are still reviewing the details – and more will likely be forthcoming from the administration in the weeks and months ahead – Legal Bytes will keep you on top of these developments as they arise.

You can read the entire report right here: Consumer Data Privacy in a Networked World, A Framework for Protecting Privacy and Promoting Innovation in the Global Digital Economy.

These are developments that affect all businesses, domestic and multi-national, global and local, consumers and regulators. The complexity and challenges of compliance should not be underestimated, nor should the administration’s commitment to follow the roadmap outlined. Rimon has teams of lawyers who have experience and follow developments in privacy and data protection, from prevention and policy to compliance and implementation. If you want to know more, need counsel, need help navigating, or if you require legal representation in this or any other area, feel free to call me, Joseph I. (“Joe”) Rosenbaum, or any of the Rimon lawyers with whom you regularly work.